Mortgages Blog

HARP 2 details emerge

For underwater homeowners who want to refinance their mortgages, the details of HARP 2 are coming into focus.

HARP 2 is a liberalized revision of the Home Affordable Refinance Program. (See Bankrate's HARP page.) HARP's goal was to allow homeowners to refinance their loans, even if they owed more than their homes were currently worth. Millions of homeowners are in this predicament because their homes lost value in the bursting of the housing bubble.

HARP was introduced in 2009, and it was designed to help homeowners with mortgages owned by Fannie Mae or Freddie Mac. The program let borrowers refinance at up to 125 percent of their homes' current values. For example, under HARP, if you owed $125,000 on a house that was now worth $100,000, you could qualify for a HARP refi, because your loan was 125 percent of the home's value. But if you owed more than 125 percent of the home's value, you were out of luck.

That 125 percent loan-to-value limit has been eliminated under HARP 2. Under new rules issued on Tuesday, there is no loan-to-value limit on HARP refis -- at least, for borrowers who have fixed-rate mortgages.

The elimination of the loan-to-value limit is the biggest change under HARP 2. Here is a rundown of HARP 2's guidelines:

The program is for borrowers whose mortgages are owned by Fannie Mae or Freddie Mac, and who got their loans before May 2009.

HARP had been scheduled to expire at the end June 2012; HARP 2 extends the expiration to the end of 2013.

There is no loan-to-value cap anymore for borrowers who now have fixed-rate mortgages.

For borrowers with ARMs, the loan-to-value cap remains 105 percent.

Borrowers can qualify for HARP 2 refis if they have paid on time for the last six months and have no more than one 30-day late payment in the last 12 months. Originally, HARP didn't allow any delinquencies in the last 12 months.

Fees have been reduced. Lenders are fond of adding fees to loans that have an added smidgen of risk. Fannie and Freddie call these fees "loan level price adjustments," and the charges easily can climb to 2 percent of the loan amount on HARP refis. Under HARP 2, the fees are reduced to zero percent on loans for 20 years or fewer, and 0.75 percent for mortgages for more than 20 years and for ARMs.

Generally speaking, the changes go into effect Dec. 1.

Regulators and analysts expect HARP 2 to result in 1 million more refis than would have closed under HARP, with an average loan balance of $150,000 to $175,000.

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23 Comments

Carolyn

January 11, 2012 at 7:01 pm

What is the required FICO to refin via HARP2?

Thanks

Danielle

January 09, 2012 at 7:51 pm

I did the harp and closed in Dec, 2009. Is there any rumor of allowing the harp 2 allowing it to be done again? Or the May 2009 refi date being pushed out?

@ mortgage king

January 08, 2012 at 5:27 am

@DM, you are correct in that your home loan must be owned by Freddie or Fannie. However, if they are not, I would research the availability to qualify for a short sale, before I consider "walking away". In non-recourse states, this is a very lucrative method of "getting out" of an underwater situation that is NOT available to HARP 2 participants.
Current Freddie and Fannie mortgage holders CANNOT short sale unless they are behind in their payments. The government does this intentionally, to punish people who are in non-recourse states from taking advantage of their states generous strategic default laws.
Check it out. Search it out.
Best wishes.

@ mortgage king

January 08, 2012 at 5:24 am

@Les, HARP 2 will refi for the amount of the existing loan balance, as long as you only have one secured loan attached to the mortgage. If you have a second, then there is additional underwriting that needs to be accomplished and this could hampen the approval process.
HARP 2 is still not the proper fix to the housing crash. Washington needs to suck it up and force these banks and loan companies to re-write these junk loans. Reducing the principal and re-working the loan terms after that has happened, is the key to re-setting the housing crash. Wall St continues to fight this, because they know there are millions of home owners who stand by their ethics and WON'T do strategic defaults on their mortgages. So Wall St continues to lobby against principal balance reductions....however, homeowners need to ask themselves, why do these big banks repeatedly "walk away" from their commercial buildings and loans, yet, homeowners are massively punished (FICO hits) for doing the same thing.
Good luck.

selfmy

January 05, 2012 at 11:40 pm

It's about dam time

Adan Saucedo

January 05, 2012 at 9:14 pm

I have a chase account and I can even get a breathing person to answer the phone so I can ask them a question. I live messages and they don't call me back. I would walk away if it wasn't for my wife that wants me to stay. I meet all the qualification but it's starting to sound like harp one, too good to be true.

DM

January 05, 2012 at 3:16 pm

And for the million of us who have loans not owned by Fannie Mae or Freddie Mac; we are still drowning and get nothing! So this is just another PR by the White House to get more votes. They are just pretending to help the middle class. I am now more than ever disenchanted with this administration.

Les

January 05, 2012 at 1:41 pm

I've been researching the possibility of refining my home thru the HARP program for about two month's now. This is Jan 05, 2012. My mortgage company, 'Nationstar' told me today that I didn't quailfy for the current HARP program, but would qualify for the HARP2 program starting March 01, 2012. What I am interested in however is when I refinance, will my mortgage company refinance my new loan for at least, the amount of my current balance at that time, not the amount of the valuation of my home which is less that the balance of my home. (Called Underwater)....

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